Wood v Crawford

Supreme Court of NSW|2009-10-27|Before: Slattery J, Mr P

CITATION : Wood v Crawford [2009] NSWSC 1479

HEARING DATE(S) : 27 October 2009, 19 & 20 November 2009, 16 December 2009

ORDERS: DECISION : 1. The plaintiff is entitled beneficially to the Dolomite Road property but the plaintiff may only obtain the legal estate on certain terms. 2. Direct the parties to prepare short minutes of order to give effect to these reasons. 3. Grant liberty to apply.

LEGISLATION CITED : Residential Tenancies Act 1987 (NSW)

Commonwealth v Booker International Pty Limited [2002] NSWSC 292 CASES CITED : Jin v Yang [2008] NSWSC 754 Salvo v New Tel Ltd [2005] NSWCA 281 Shepherd v Doolan [2005] NSWSC 42

PARTIES : Plaintiff: Michael Wood Defendant: Eddy Crawford

COUNSEL : Plaintiff: Ms N Obrart Defendant: Mr P Doyle

SOLICITORS : Plaintiff: Keith Hurst & Associates Defendant: Farry & Co

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2522/09 MICHAEL WOOD v EDDY CRAWFORD JUDGMENT 1 HIS HONOUR: - Introduction

2 In late 2003, in common with many couples with young families, Michael and Charie Anne Wood could not afford to buy a house. Mr Wood was working outside the home. Ms Wood was caring for their four children. They were managing their family in a rented two-bedroom house. They needed a larger home. They decided to approach Eddy Crawford, Ms Wood's grandfather, to see if he could assist.

3 Mr Crawford offered to help. Mr and Ms Wood had seen a property in Dolomite Road Cranebrook and were keen to buy it. They took Mr Crawford to see the property. Mr Crawford and his wife Rose agreed to buy the property and allow Mr and Ms Wood to live in it. The purchase for $335,000 was completed in late September 2003. Soon after Mr and Ms Wood and their family moved into the property.

4 The Woods' purchase of the property was financed by a mortgage advance from Perpetual Trustees Victoria Ltd (Perpetual). Mr Crawford arranged the mortgage with Perpetual, procuring an advance of $402,000. He and his wife Rose already owned a property at Racecourse Road Penrith. He used $52,093.39 from the mortgage advance to discharge their existing mortgage over the Racecourse Road property. All the costs and expenses of the purchase of the Dolomite Road property were paid from Perpetual's mortgage advance.

5 As part of their mutual arrangements Mr Crawford and Mr Wood agreed to pay the mortgage out of a loan account in their joint names. Part of the mortgage repayments related to the Dolomite Road property. A smaller proportion of the mortgage payments were referable to the Racecourse Road property. The precise arrangements for payment out of this joint account are detailed later. The parties paid the mortgage on time. The Woods painted and plastered the house. Subject to some recent payment issues, Mr Wood paid Council rates, insurance, water rates and maintenance on the Dolomite Road property from the date of its purchase.

6 Mr and Ms Wood's marriage broke down in March 2008 and they separated. There are unresolved proceedings between them in the Family Court of Australia.

7 Rose Crawford died in July 2008. The Dolomite Road property was transferred into the sole name of Mr Crawford.

8 Disputes arose between Mr Crawford and Mr Wood about Mr Crawford's ownership of and continuing responsibility for the mortgage payments over the Dolomite Road property. Mr Crawford claims that Mr Wood is a tenant and has issued an eviction notice to him. Mr Wood resists this claim. He says that because of the conversations between them at the time of purchase Mr Crawford holds the Dolomite Road property on trust him. Mr Crawford says that there is no trust but that Mr Wood merely has a right to purchase the property when he could afford to do so.

9 Mr Wood commenced these proceedings, as plaintiff, in the Equity Division of this Court against Mr Crawford, as defendant, to attempt to resolve these disputes.

10 Mr Wood commenced proceedings by summons. No pleadings were ordered. Nevertheless, through exchanges of submissions and statements of issues, the real questions between the parties have been well defined in the course of the hearing. To resolve all the disputes between the parties the Court must decide the following issues:- a. Does Mr Crawford hold the Dolomite Road property on trust for Mr Wood? b. Is the true relationship between Mr Wood and Mr Crawford and Mr Wood in relation to the Dolomite Road property one of landlord and tenant which is amenable to the Residential Tenancies Act 1987 (NSW)? c. Is Mr Wood precluded on discretionary grounds from seeking equitable relief by reason of any relevant misconduct on his part? d. If Mr Wood is not entitled to equitable relief against Mr Crawford, is Mr Crawford liable to Mr Wood for moneys had and received for the rates, taxes and other payments made by Mr Wood in respect of the Dolomite Road property? e. If Mr Wood is entitled to equitable relief, must he do equity and as a condition of that grant discharge Mr Crawford from Mr Crawford's obligations under the mortgage to Perpetual? f. If Mr Wood is entitled to a beneficial interest in the Dolomite Road property as against Mr Crawford, must Mr Wood share that beneficial interest with Ms Wood? g. What other financial adjustments are necessary between the parties?

11 The Court will deal with each of these issues in turn. The first issue of whether or not Mr Crawford holds the Dolomite Road property on trust for Mr Wood requires a more detailed examination of the facts. There is little dispute about many of these facts.

12 The Court has a policy of reducing the risk of identity theft through the Court's published judgments. In conformity with this policy this judgment does not publish the precise address of either the Dolomite Road property or the Racecourse Road property. Neither does this judgment publish details of any bank account or other similar personal information. More precise information can be obtained from the Court's file if it is required.

Agreed Facts and Facts in Issue 13 Mr Wood says that in the latter part of 2003 he and Ms Wood were unable to get a mortgage approved so he and Ms Wood could buy a house, because only he was working. They were looking for a home. He says that he had a conversation with Mr Crawford who said "I will help you out and get the loan for your new house in our names until you can afford to transfer the loan into your name". 14 Mr Crawford does not really dispute that some conversation such as this occurred between the parties at the time the Dolomite Road property was proposed for purchase in late 2003. As is discussed below, Mr Crawford's account of this conversation was in substance not very much different from Mr Wood's version. I find that Mr Crawford said these words. 15 When Mr and Ms Wood had done their house hunting they decided upon Dolomite Road, Cranebrook as the property they wanted. They told the defendant, Mr Crawford that this was the house they wished to live in and to be purchased pursuant to the arrangement. 16 Mr Crawford and his wife Rose were prepared to proceed in accordance with the earlier discussions and contracts were exchanged on 3 September 2003. Mr Crawford provided the deposit on the exchange. 17 The purchase of the property was financed by a mortgage advanced from Perpetual, which advanced $402,000. The purchase price of the property was $335,000. At the time of the settlement of the purchase Mr Crawford used $52,093.39 out of the mortgage advance to discharge his existing mortgage over the Penrith property. 18 Mr and Ms Wood moved into the property on 29 September 2003. 19 After they moved in Mr and Ms Wood did the kind of work to improve the property that would be expected of couples expecting to reside in a property over the long-term. Apart from general cleaning and maintenance of the property, they plastered and painted the walls. I accept Mr Wood's evidence that he and Ms Wood did this work. Mr Crawford does not contest that they both did the work. They paid for the costs of the materials themselves. The documentary evidence supports Mr Wood's account. A more detailed account of the oral and documentary evidence in relation to this work appears in the following paragraphs.

20 Mr and Ms Wood often paid cash to local hardware and home wares retailers for items used to repair, refurbish and improve the property. In 2005 Mr Wood paid over $300 to Bunnings Warehouse for a clothesline hoist. He paid for a labourer to prepare a cement foundation for the hoist. He engaged and paid about $200 to an electrician to install TV points in all the bedrooms of the property. He paid in excess of $800 for the repair of the ducted air-conditioning system. 21 The evidence includes receipts for paint purchased from Kenfords Decorative Market Pty Limited in September 2003 that was used to paint the property. Other paint came from the Bunnings Warehouse at North Penrith, the receipts for which are also in evidence. 22 The painting and plastering involved other incidental expenditure for which receipts were not available. Mr Wood estimates, and the Court has no reason to doubt the correctness of this estimate, that he paid in excess of $3,000 for hardware supplies to assist in the painting and plastering of the property. People do not often keep records of this kind of domestic expenditure over many years, so the absence of receipts for all of this expenditure is not remarkable. It does not cast doubt on Mr Wood's account of the work done. There is sufficient objective documentary evidence of relevant expenditure at retail outlets to support the case that Mr and Ms Wood expended money on improving the Dolomite Road property. 23 Mr Wood says, and I accept, that he purchased paint drop sheets, plaster, light fittings and the clothesline hoist from Bunnings Warehouse Stores in Penrith and Minchinbury, paint from Kenfords Decorating Market, light fittings from an electrical wholesaler in Minchinbury and from a light fitting wholesaler in South Penrith and Harvey Norman in South Penrith for both the renovation and regular maintenance of the property from September 2003 to date. 24 After Mr and Ms Wood moved in Mr Crawford occasionally spoke to Mr Wood about refinancing the mortgage. In late September 2007 a conversation took place between them to the following effect: "Mr Wood: "My dad's estate is coming through and we need to think about refinancing Dolomite Road when we have the opportunity.

Mr Crawford: I will talk to Geoff from Resi and get some figures." 25 Mr Crawford then gave to Mr Wood an envelope that had written on it the words "fortnightly it would reduce term by about five years and cost no more". This is presumably a reference to some refinancing figures that Mr Wood had obtained from the mortgage provider "Resi". 26 After Mr and Ms Wood moved into the property Mr Wood commenced paying mortgage payments in respect of the Dolomite Road property into a joint loan account with St George Bank, which had been set up specially for this purpose. The arrangement at the time of purchase was that Mr and Ms Wood would make the mortgage payments of approximately $1200 per fortnight from this account and Mr Crawford would put in the extra $400 to cover the portion of the payments relating to the Racecourse Road property. Mr and Mrs Wood were to keep the St George Bank account in funds to cover the mortgage payments for the Dolomite Road property. Mr Crawford says that initially this arrangement worked well. Mr Wood continued to make the mortgage payments to Perpetual until December 2008 when the combination of Mr Wood's job loss and the separation caused the arrangements to break down. 27 It was the financial consequences of this breakdown in the arrangements that led Mr Crawford to take the action described below bringing the dispute to a head. Mr Wood's failure after December 2008 to make mortgage repayments meant that Mr Crawford has been required to take responsibility for them. He has made the mortgage payments since then because of his responsibility for the part of the loan relating to the Racecourse Road property. He says, and I accept, that this has caused him "significant financial stress". He understandably fears that if Perpetual forecloses on the loan he may lose the Racecourse Road property.

28 Mr Wood paid the Council rates, insurances, water rates and maintenance in respect of the property from the date of purchase at least up to the time of disputes breaking out between the parties at the beginning of this year. Since Mr Wood lost his job and disputes between the parties arose, this expenditure has come from a credit card facility with Westpac Banking Corporation in Mr Crawford's name. This facility was set up when Dolomite Road was acquired as an act of generosity by Mr Crawford to assist Mr and Mrs Wood's cash flow in relation to the property. Mr Crawford allowed Mr Wood to use the card to meet payments for the home and contents insurance and outgoings related to the property such as council and water rates. Mr Wood claims in his affidavit that he has paid Council rates, insurance, water rates and maintenance in respect of the property from the date of its purchase to date. In recent times this has only been possible because Mr Wood was using the credit made available by Mr Crawford on this Westpac credit card facility. Mr Crawford initially set this facility up with a $1000 credit limit. He says, that the limit was changed to $5000 without his knowledge. I accept that Mr Crawford did not increase the credit limit on the card himself. Mr Wood must have done this. Mr Crawford says that he has been making payments for council rates since February 2008 as Mr Wood has refused to make them. I accept this is what happened. 29 These proceedings were brought to a head when in mid April this year Mr Crawford decided to place the Dolomite Road property on the market. Mr Wood first became aware of this when a real estate agent knocked on his door and warned him that the agent would be bringing people through the following weekend. This led to solicitors' correspondence in which Mr Wood claimed a beneficial interest in the property and Mr Crawford claimed that Mr Wood was his tenant. The parties now take the same positions in these proceedings. 30 There was very little contest in relation to Mr Wood's evidence from Mr Crawford. Mr Crawford says that he and his late wife Rose were concerned about Mr and Ms Wood and wanted to help them to buy their own house. In paragraph 5 of his affidavit of 15 July 2009 Mr Crawford attempted to give an account of his agreement with Mr and Ms Wood that was ruled inadmissible in form. He gave oral evidence about the formation of the agreement. His oral evidence was frank and credible. But it also showed how little dispute there really is between the parties in this case about their joint intentions as to the ownership of the Dolomite Road property. 31 What Mr Crawford said in his evidence in chief was that Mr Crawford and his late wife Rose proposed the idea of these arrangements and Mr and Ms Wood agreed and "thought it was a marvellous idea, wonderful idea". The idea was that Mr and Ms Wood "would use our house as security to finance a loan because [Mr Wood] was not in a position himself to secure a loan from any lending society". Mr Crawford and Mr and Ms Wood looked at a number of houses together. Of the Dolomite Road property Mr Crawford said, "…eventually Michael picked out the house at Dolomite Road. It was not our choice, by the way. It was -- I'm not saying I didn't like it but it was not our choice. They made the choice." 32 According to Mr Crawford the arrangements included that, "Michael was supposed to pay his share of (the St George Bank) mortgage payments each month." Mr Crawford explained his intention in the following way, "it was always my intention that eventually when Michael was in a financial position to obtain a loan in his own behalf to take over the loan of that property completely. We even went to the extent of visiting a bank on one occasion, the St George Bank in the Plaza at Penrith, this is 18 months or so ago and they virtually approved his application for a loan. All he had to do was to go to the bank on the Monday and sign the papers. He didn't turn up." When asked to give an account of just what was said to Mr Wood to form the arrangements, Mr Crawford said "I want you to take over this mortgage as soon as you are in a financial position to do so." Mr Crawford had trouble remembering much of the conversation beyond this. 33 Mr Crawford elaborated upon his intention in his evidence in chief by saying "Always, it was always the intention it would go into Mr Wood's name. I wanted no part of it…[Mr Crawford and his wife Rose]… just wanted to help them out in a situation which we could see no outcome for." He explained that the property was purchased in his and in his wife's name "because it could not be purchased in Mr Wood's name", because the bank would not finance Mr and Mrs Wood. 34 In cross-examination Mr Crawford made his state of mind even clearer. When his evidence in chief was summarised to him as being that he always had the intention to transfer the title of the Dolomite Road property to Mr Wood and that Mr Wood would take over the entire portion of the mortgage relating to that property, Crawford said, "That has always been my intention from March 2003, that Mr Wood would eventually be able to take over that mortgage once he obtained financial backing for it." He went even further and said, "I do not wish to retain ownership of Dolomite Road. By the same token I do not want to be left with a mortgage that Dolomite Road carries." Mr Crawford's evidence identified here I accept as a genuine account of his actual state of mind in making arrangements with Mr and Ms Wood for the disposition of the Dolomite Road property. 35 There is one other important item of evidence of Mr Crawford's intentions at the time of the acquisition of the Dolomite Road property. Before the property was purchased Mr Crawford instructed his solicitors to draft a deed to reflect the arrangements between the parties. The deed was never executed but it has some limited value in reflecting Mr Crawford's instructions and Mr Wood's attitude at the time. The deed does not provide for Mr and Ms Wood to have an immediate beneficial interest in the Dolomite Road property. It conferred a right of occupancy and a right to purchase. Mr and Ms Wood did not sign it. This deed supports an inference that Mr Crawford did not intend to grant an immediate beneficial interest to Mr and Ms Wood. Mr Wood's failure to sign it however supports the inference that that was not his view of the arrangements. 36 There was evidence in the proceedings about other conversations between the parties after 2003. I do not think this other evidence adds anything of significance to the material that I have identified above. Mr Wood also adduced evidence from Mr John Kozor, a Certified Real Estate Valuer who valued the Dolomite Road property at $340,000 as at 17 August 2009 and who also gave the rental value of the property since 2003, which is lower than the mortgage payments referrable to the property. I now examine the legal effect of this evidence.

Does Mr Crawford hold the Dolomite Road property on trust? 37 Mr Wood's case was that it should be inferred from the circumstances that Mr Wood and Mr Crawford intended to create an express trust in respect of the Dolomite Road property. For that submission Mr Wood relies upon cases such as Salvo v New Tel Ltd [2005] NSWCA 281 [33] - [35] and Commonwealth v Booker International Pty Limited [2002] NSWSC 292, at [34]. These cases affirm that it is well-established that an intention to create an express trust can be inferred from the full range of relevant circumstances including the nature of the transaction and the construction of the words used. Alternatively Mr Wood relies upon the doctrine that equity will prevent the unconscientious denial by the legal owner of property of another party's rights where the parties agreed or that it was a common intention that the claimant should have an interest in the property and the claimant acted to his detriment on the basis of the agreement or common intention: Jin v Yang [2008] NSWSC 754 per White J at [44] applying his Honour's own statement as to "common intention" in the formation of constructive trusts in Shepherd v Doolan [2005] NSWSC 42 at [31] and [34] - [42]. 38 White J's statement of the law in these two cases is a convenient summary of the applicable principles that I adopt and apply here without further elaboration. 39 Mr Crawford's case in contrast was that there was no express trust or that no constructive trust made out. It was submitted on his behalf that it would not be inequitable or unconscionable in the circumstances for the defendant to retain the benefit of the Dolomite Road property. 40 Mr Wood in my opinion has in conformity with established principle made out a case that Mr Crawford holds the Dolomite property for Mr Wood's benefit on an express trust or a constructive trust. Mr Wood may only convert his beneficial interest in the property to a legal estate by discharging Mr Crawford from all mortgage and other obligations in relation to the property. I reach this conclusion for the following reasons. 41 First, I accept that Mr Crawford did describe his and his late wife's proposed assistance to Mr and Ms Wood as getting "the loan for your new house in our names" (emphasis added). The property was being held in Mr Crawford's and his wife's name simply because Mr Wood and Ms Wood could not get finance for it themselves. Mr Crawford used similar language during Mr and Ms Wood's occupation of the property. In an e-mail of 12 August 2006 relating to the possible refinance of the property Mr Crawford wrote to Mr Wood "Get a valuation of your property and if it comes in at 500 plus then we may be able to do something right away" (emphasis added). This language represents Mr Crawford's early and continuous recognition that the agreement was that the property was to be Mr and Ms Wood's beneficially. 42 Secondly, Mr Crawford's acknowledgement of his own intention at the time was that the Dolomite Road property "would go into Mr Wood's name. I wanted no part of it..." Mr Crawford's conception of his own immediate role was that he was merely holding the property so it could be transferred to Mr Wood and that he had no interest in it himself. Any contention now that Mr Crawford has a beneficial entitlement to the property, provided Mr Wood performs his side of the arrangement, stands in tension with these words. Mr Crawford's role as described in these words is consistent with his generously offering to provide the name in which Mr and Ms Wood could obtain external finance because they could not get finance on their own. 43 Thirdly, the actual choice of the Dolomite Road property itself is important. Mr Crawford expressed the subtle but firm opinion that the Dolomite Road property was not really his first choice of house. The property was not one that he showed any interest in enjoying for either residential or investment purposes. 44 Fourthly, the parties structured their arrangements so that Mr and Ms Wood would make the mortgage payments on the Dolomite Road property. The amount to be contributed by Mr and Mrs Wood in the short to medium term was not calculated by reference to a market rent for the property but rather by reference to the actual mortgage payments being made to Perpetual. This structure together with Mr Wood's obligation to bear owner's obligations such as Council rates, insurance and the like, rather than a lesser rental, are a further basis to infer a common intention that Mr Wood would have an immediate beneficial interest in the property. 45 Fifthly, the parties set up a separate joint account for the collection and making of the mortgage payments, subject to Mr Crawford's topping the account up to cover the obligations referable to the Racecourse Road property. The formal steps that Mr Crawford took to create this special account for making the mortgage payments rather than mixing them generally with his own finances is an indication of his approach of dealing fairly with Mr and Mrs Wood and a recognition on his part of their expectations that they were arranging the making of mortgage payments for their own property. A part of Mr Crawford's notable generosity in creating what he described as a "wonderful opportunity for a young couple", was also demonstrating to them by such small formal steps that the property really was theirs. 46 Sixthly, the Woods' performance of improvements to the property, their not insignificant expenditure in relation to those improvements and the extent of that work point to the creation of the trust alleged. The extent of this conduct is not consistent with a mere rental relationship. 47 Seventhly, Mr Crawford's idea that Mr Wood would "take over" the loan to Perpetual when he was in a financial position to do so, brings with it the idea that the legal estate in the Dolomite Road property would be transferred to Mr Wood at the same time. There were regular discussions about refinancing between the parties that are consistent with their common intention that this was to occur. 48 Eighthly, Mr Crawford's simple statement that "I do not wish to retain ownership of Dolomite Road" was an expression of his understanding of the arrangements upon the purchase right from the beginning. His intention was never to hold a beneficial interest in the property. This was the natural corollary of his and his wife's generosity to Mr and Ms Wood. 49 I find there was from the time of its acquisition a common intention to create an express trust that Mr Crawford (and when she was alive his late wife Rose) would hold the Dolomite Road property for the benefit of Mr Wood and Ms Wood. Under this trust Mr Wood or Ms Wood would only be entitled to a transfer of the legal estate of the Dolomite Road property if they entirely discharged Mr Crawford from all obligations in respect of the property. There was a common intention to create an express trust by the means explained in Salvo v New Tel Ltd [2005] NSWSC 281 at [33]. 50 I explain below that both parties do not take any issue that Ms Wood is not a plaintiff to these proceedings. Both parties ask me to determine the beneficial entitlement to the property without her being a party. They advance and accept Mr Wood as the sole claimant to a beneficial interest for the purposes of these proceedings. 51 I also find that a trust exists in this case on the alternative basis propounded by Mr Wood. Given the common intention that I have found it would be unconscientious now for Mr Crawford to deny the beneficial interest now claimed by Mr Wood. Is necessary to make an observation about the operation of doctrines of constructive trust in this case. A remarkable feature of these proceedings is that, although defending them, Mr Crawford disclaimed an intention to do anything un-conscientious. His evidence about his intentions was frank and for the most part contrary to self-interest. His principal and understandable concern was to ensure that the terms of the trust were sufficiently clearly determined that when he ceased to be registered proprietor he would not be left with any residual financial obligation with respect to the Dolomite Road property. This finding may become of significance when costs issues are argued. Are Mr Crawford and Mr Wood landlord and tenant? 52 Mr Crawford's contention is that the agreement that he made with Mr Wood for Mr Wood and his family to reside at the Dolomite Road property falls within the definition of a "residential tenancy agreement" in section 3 of the Residential Tenancies Act 1987. Section 3 of the Act provides as follows: " residential tenancy agreement means any agreement under which a person grants to another person for value a right of occupation of residential premises for the purpose of use as a residence:

(a) whether or not the right is a right of exclusive occupation,

(b) whether the agreement is express or implied, and

(c) whether the agreement is oral or in writing, or partly oral and partly in writing, and includes such an agreement granting the right to occupy residential premises together with the letting of goods."

53 My findings about the conversations between Mr Wood and Mr Crawford and their subsequent conduct are not consistent with a mere relationship of landlord and tenant. Although it is true that Mr Wood and his family gained a right of residence at the Dolomite Road property through the arrangements he made with Mr Crawford, equity will recognise that he was more than a mere tenant because of the wider arrangement between them.

54 Mr Crawford contends that Mr Wood is disentitled from equitable relief on two grounds. In the first place he contends that Mr Wood has not come to court with clean hands because he has not made any agreed mortgage payments since December 2008. In the second place he contends that Mr Wood is guilty of laches because he did not commence these proceedings until April 2009 well after negotiations for the sale of the of the Dolomite Road property broke down in December 2008 and well after Mr Crawford had commenced proceedings in the CTTT. Both these contentions fail.

55 Mr Wood has not made mortgage payments since December 2008. Mr Crawford has underwritten the mortgage payments since that time. Mr Wood's failure to make these mortgage payments was a product of the paralysis in negotiations between himself and Mr Crawford. It was not the product of any deliberate attempt to thwart the agreement which had been made. Mr Wood's failure to make the mortgage payments is readily explained by the loss of his job rather than any deliberate conduct.

56 Mr Crawford's contention that Mr Wood is guilty of laches also fails. The delay concerned is only a period of four months. This is not a significant period. When a contention of laches is being considered Mr Wood should be allowed some time to get legal advice to determine the most appropriate course of action after the breakdown of negotiations. A period of a few months to take and consider legal advice before launching proceedings in this Court is not unreasonable in the circumstances. The seeking, developing, considering and making decisions upon legal advice about Supreme Court proceedings can take time. Mr Wood had just lost his job in December 2008. Committing to the commencement of proceedings in the Supreme Court is a decision with financial consequences, which should be taken cautiously. Taking some four months to settle on this course cannot be criticised.

57 Furthermore a degree of reaction time to the breakdown of the negotiations between the parties can also reasonably be allowed. It can take a party some time to appreciate that negotiations have actually failed, before time commences to run against them. Is Mr Crawford liable to Mr Wood for moneys had and received?

58 Mr Wood propounds the common-law remedy of reimbursement for moneys had and received in the event that he was unsuccessful in his primary equitable claim. Had Mr Wood been unsuccessful in his primary claim to relief there may well have been a good argument for reimbursement of the difference between the mortgage payment contribution made by Mr Wood on account of the Dolomite Road property and the net benefit received by Mr Wood from his not having to rent alternative accommodation.

59 I have found that Mr Wood was successful in his primary equitable claim. It is not necessary to determine his alternative claim for moneys had and received. What conditions should be placed on any grant of equitable relief?

60 Mr Crawford submits that if the Court makes a declaration that Mr Wood is entitled in equity to the Dolomite Road property, that it should not be transferred to Mr Wood without him reimbursing Mr Crawford for the Dolomite Road proportion of the payments made by Mr Crawford. The principle that a person who seeks equitable relief must do equity is well established.

61 Here, as the evidence shows, consequent upon Mr Wood's default in making mortgage payments after the breakdown in negotiations between the parties in December 2008, Mr Crawford ensured that mortgage payments were made to Perpetual and that the mortgage did not go into default. Mr Crawford made the mortgage payments, including the Dolomite Road proportion of the payments, for a property which the Court has now found in equity to be Mr Wood's. It would be inequitable for the Court to exercise its power to order Mr Crawford to transfer the property to Mr Wood without Mr Wood being required fully to reimburse Mr Crawford the amount of the Dolomite Road proportion of the payments made by Mr Crawford. Mr Wood should also ensure that the Perpetual mortgage is paid out or that Mr Crawford is released from it. There is no other obvious way of doing full equity between the parties consequent upon the grant of equitable relief.

62 Accordingly I will order that Mr Crawford will be required to transfer the Dolomite Road property to Mr Wood if and only if Mr Wood reimburses Mr Crawford for the payments he has made in relation to Dolomite Road. The payment of this sum can be arranged at the time of settlement of the transfer. However in the meantime Mr Wood should make (or indemnify Mr Crawford) for the portion of the mortgage payments referable to Dolomite Road. 63 In the course of final submissions Mr Crawford contended that in order to ensure that Mr Wood pays Mr Crawford the Dolomite Road proportion of the total of past payments to Perpetual that Mr Crawford should have an equitable charge over Mr Wood's Queensland property. Mr Wood proposes to sell the Queensland property in order to finance the acquisition of the Dolomite Road property under the Court's orders. Mr Crawford claims that such an equitable charge would then be supportable by a caveat.

64 There are several difficulties with this submission. The first is that Mr Crawford has not claimed any relief to this effect. This issue was first raised in final submissions. Secondly, it is also difficult to see what the legal basis for Mr Crawford's claim to the Queensland property could possibly be. Mr Wood has merely offered to put it up for sale. The Queensland property was never the subject of any discussions between Mr Crawford and Mr Wood. Nor is the conduct of the parties readily to be analysed as founding an inference that Mr Wood provided security over the Queensland property to assure the smooth transfer of the Dolomite Road property from Mr Crawford to Mr Wood. One of the problems with the arrangement between Mr Wood and Mr Crawford is that they did not make adequate arrangements about the time by which and the conditions under which Mr Wood would be required to acquire the Dolomite Road property in due course. The Court will not grant this relief to Mr Crawford.

65 The Crawford submission highlights another important practical issue associated with a grant of equitable relief in this case. Mr Crawford is already concerned that the acquisition of the Dolomite Road property from him may extend into the indefinite future. Mr Wood stated that he intends to finance the purchase of the remaining interest in the Dolomite Road property by the sale of the Queensland property. Mr Crawford does not know when the Queensland property is going to be sold. It would be inequitable for Mr Crawford to be left in a situation in which the disposal of the Dolomite Road property is left unresolved as result of my orders.

66 Mr Crawford is not without his remedies to ensure the sale goes through. I will direct that Mr Wood be required to complete the purchase of the Dolomite Road property within a defined period. The period set must be fair to both sides. If the sale of the Dolomite Road property is not completed within that set period then the parties can approach the Court for consequential relief to ensure that the Court's orders are carried into effect.

67 In current economic conditions achieving a sale of the Queensland property may be difficult in the short term. Mr Crawford has wished to resolve the issues in these proceedings for some time. They have remained unresolved for too long. He looks for a quick sale. To strike a fair balance between the parties. I propose to direct that the transfer of the Dolomite Road property be completed by 1 May 2010. This will give Mr Wood just over four months to sell the Queensland property, secure the proceeds of sale and then use them to arrange the acquisition of the Dolomite Road property.

What are the respective entitlements of Ms Wood and Mr Wood?

68 The court has not determined the respective entitlements of Ms Wood and Mr Wood in the Dolomite Road property. Those entitlements will be determined in the Family Court of Australia. At the commencement of these proceedings the Court raised with the parties the question of whether or not Ms Wood should be a party to these proceedings. Neither Mr Wood nor Mr Crawford proposed joining her as a party. I was told that if the Court granted the relief that Mr Wood seeks that the property would then become the subject of a claim in the Family Court that it was matrimonial property. The expectation of the parties is that if the respective entitlements of Mr Wood and Ms Wood to the Dolomite Road property could not be resolved by agreement that they would be determined in property settlement proceedings in the Family Court in 2010. I am therefore invited to determine the proceedings as they are presently constituted and will do so.

What other financial adjustments between the parties are necessary?

69 In the course of final submissions Mr Crawford proposed that Mr Wood's reimbursement to Mr Crawford for Mr Crawford making mortgage payments on the Dolomite Road property should extend to dealing with the current balance of $4,638.03 in the joint Westpac Banking Corporation Visa card account (account number withheld).

70 The issue of Mr Wood's reimbursing Mr Crawford in respect of past mortgage payments on the Dolomite Road property has been dealt with above. I propose to order that as a condition of a grant of equitable relief to Mr Wood that he is required to pay Mr Crawford the Dolomite Road proportion of Mr Crawford's past mortgage payments, which is now agreed at $28,000. However Mr Crawford's final submission extended beyond the making of this payment, and included dealing with the identified balance of the Visa account.

71 As a result of this judgment this minor issue should be able to be resolved between the parties. The Westpac Visa account served as a joint vehicle for the parties to make their mortgage payments and its operations are well understood by the parties. If there is a balance in the account which is not automatically dealt with by my orders for the repayment to Mr Crawford of his Dolomite Road related mortgage payments, then that balance will need to be dealt with by separate orders. The balance in the account however is so small that it is not cost-effective for the parties or the Court to convene to argue about its disposal. Accordingly, I will direct the parties to bring in short minutes of order by which they will be required to confer before 1 February 2010, in the light of my judgment, to create an agreed disposal of the balance of the Westpac Visa account to either Mr Crawford or Mr Wood respectively. If an agreed accounting to dispose of the balance of this account cannot be reached then the short minutes should provide for making brief written submissions on the issue so that the Court can make orders dealing with the balance.

72 Without deciding the matter because it may still be the subject of further submissions there may be much to be said for the analysis that the balance of this Westpac Visa account, which balance has not been used as yet for the making of any mortgage payments to Perpetual, should be returned to the party that topped up the account with the funds that are now in it. The account was kept in funds in anticipation of being used to make mortgage payments. In the result the funds made available were not used for their intended purpose. The funds in the account should be returned to their source. The accounting exercise to be undertaken is really one of determining whether Mr Wood or Mr Crawford is the source of the balance of the Westpac Visa account.

Conclusion 73 In the result I have found on the terms stated that Mr Wood is entitled beneficially to the Dolomite Road property. I direct the parties to prepare short minutes of order to give effect to these reasons. I grant liberty to apply. **********

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Residential Tenancies Act 1987(NSW)

At a glance

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Judgment (53 paragraphs)

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Cases Cited (5)

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